Sanderson Farms, the nation’s third largest poultry producer, is being acquired for $4.53 billion as the price of chicken soars.
Cargill and privately held Continental Grain formed a joint venture to acquire Sanderson and will pay $203 per share in cash for a company that last year processed more than 4.8 billion pounds of meat.
The companies plan to combine Sanderson Farms with Wayne Farms, a Continental Grain subsidiary, to form a new, privately held poultry business. Operations will include poultry processing plants and prepared foods plants across Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina, and Texas.
Wayne Farms has more than 9,000 employees. It makes products under brand names including Wayne Farms fresh and prepared chicken; Platinum Harvest premium fresh chicken; Chef’s Craft gourmet chicken; Naked Truth premium chicken and Ladybirdy premium chicken.
After falling last year, chicken prices have begun to surge. Major restaurant chains, seizing on demand, have begun to offer their own variations of fried chicken sandwiches, further heightening demand. McDonald’s Corp., Popeyes Louisiana Kitchen Inc. and Wendy’s Co. and Burger King have all introduced new variations of chicken sandwiches, crispy, spicy, or otherwise.
McDonald’s cited sales of chicken sandwiches as part of the reason it’s revenue spiked, and shortages are causing prices surges. In a conference call with investors, WingStop, the chicken wing chain, said a little over a week ago that the price for wings on the spot market are up 125% and it sees more of the same for the rest of the year.
The pandemic contributed to price hikes as well. In addition to snarled supply chains, a number of national restaurant companies like Applebee’s that were hammered when they were forced to close their restaurants began offering online-only wing brands because they are so easy to package and deliver.
Sales at Sanderson Farms soared more than 34% during the second quarter compared with the same three-month period last year.
“Expanding our poultry offerings to the U.S. is a key enabler of our ability to meet customer and consumer demands,” Cargill Chairman and CEO David MacLennan said in a prepared statement Monday.
Wayne Farms CEO Clint Rivers will lead the combined company.
Sanderson Farms, based in Laurel, Mississippi, will become a private company and its shares will no longer be traded on Nasdaq. Shares jumped about 8% before the opening bell.
The deal is expected to close by the end of this year or early next year. It still needs approval from Sanderson Farms stockholders.